On Nov. 30 it was announced that all shares of publicly held Collectors Universe, Inc. will be purchased by D1 Capital Partners, L.P. and Cohen Private Ventures, LLC for $75.25 cash per share. In doing so, the parent company of the Professional Coin Grading Service (PCGS) which operates grading and related services for coins, currency, trading cards, event tickets, autographs, and historical and sports memorabilia, will become privately owned. The transaction is expected to close in the first quarter of 2021.
The investor group purchasing Collectors Universe is led by sports card collector Nat Turner. Cohen Private Ventures invests capital for hedge fund billionaire Steven A. Cohen and his family.
The price of $75.25 per share is more than triple the price at which the company’s stock traded at the end of 2019, when it closed at $23.05. Within the past year, shares have traded for as low as $13.26. Before topping $30 per share in June this year, Collectors Universe shares had not traded above $30 since early 2000.
PCGS, with Numismatic Guaranty Corporation (NGC), is one of the two most respected and most utilized coin grading services. The numismatic and other collector communities need to assess the impact, financially and otherwise, that this development may have on their respective hobbies and industries.
The significant jump in the value of Collectors Universe shares over the past eight months reflects a surge of collector interest during the economic lockdowns resulting from the COVID-19 pandemic. There are several high-caliber collections that have come onto the market this year or in the near future that have and are attracting strong prices. In the absence of almost all coin shows, many collectors have turned to auctions and online vendors to add to their holdings.
In a sense, the relatively high price at which Collectors Universe is being sold signals good things for the underlying numismatic market. The new ownership would not be willing to plunk down almost $700 million cash unless their judgment was that the products and services offered by the company are projected to maintain its recent surge in activity and likely increase.
In some business takeovers, the objectives of the buyers sometimes are to chop up the enterprise to maximize short-term value. With a major sports card collector leading the investment group in a cash transaction, there will be an incentive to maintain existing products and services. Further, there will not be the threat of having to repay financing loans in the short term, which could lead the new owners to take a short-sighted approach of needing to raise quick cash flow without regard to long-term development of the business.
Consequently, I don’t think that dealers or collectors in the niches served by Collectors Universe will suffer from the forthcoming change in ownership. It is even possible that this development may encourage further interest in numismatics from more deep-pocket collectors and investors.
The buyout of Collectors Universe could also spark interest from other investors seeking to acquire Certified Collectibles Group, LLC. This is the privately held parent company of NGC, Numismatic Conservation Services, Paper Money Guaranty, and other collectibles grading and certification services. It is also possible that there may be efforts to establish other businesses to certify and grade a range of collectible niches.
To summarize, I consider the announced purchase last week of Collectors Universe to have little downside in the collectibles markets where it operates. At the minimum, I expect to see the status quo, but also wouldn’t be surprised if it ends up sparking further interest in numismatics and other collectibles.
Patrick A. Heller was honored as a 2019 FUN Numismatic Ambassador. He is also the recipient of the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award, 2012 Harry Forman National Dealer of the Year Award and 2008 Presidential Award. Over the years, he has also been honored by the Numismatic Literary Guild (including twice in 2020), Professional Numismatists Guild, Industry Council for Tangible Assets and the Michigan State Numismatic Society. He is the communications officer of Liberty Coin Service in Lansing, Mich., and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious metals subjects. Past newsletter issues can be viewed at www.libertycoinservice.com. Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 a.m. Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio archives posted at www.1320wils.com).